EU clears path for 5 bln euro Ukraine military aid boost

France had insisted on a strong "buy European" policy for arms eligible for refunds while Germany demanded bilateral aid be taken into account in determining the size of countries' contributions to the fund, diplomats said. Diplomats said a compromise has now been found that allowed some flexibility on "buy European" rules.

European Union countries are close to a deal on a military aid fund for Ukraine that would pave the way for an injection of 5 billion euros ($5.46 billion), diplomats said on Tuesday. The EU's member countries have been engaged in months of wrangling over a fund called the European Peace Facility, with France and Germany at the centre of much of the debate.

The fund operates as a giant cashback scheme, giving EU members refunds for sending munitions to other countries. France had insisted on a strong "buy European" policy for arms eligible for refunds while Germany demanded bilateral aid be taken into account in determining the size of countries' contributions to the fund, diplomats said.

Diplomats said a compromise has now been found that allowed some flexibility on "buy European" rules. It takes account of bilateral aid while not allowing countries to completely offset such aid against their contributions to the fund, they said. Barring any last-minute glitches, the deal looked set to be approved by ambassadors from the EU's 27 member countries at a meeting in Brussels on Wednesday, the diplomats said.

Berlin's ambassador to the EU, Michael Clauss, said Germany supported the compromise. "It's a good solution for Ukraine because it allows for the delivery of bilateral military aid, avoiding bureaucratic delay, as part of the European effort," he said.

Details of the compromise were first reported by Politico. The EPF has already been used to bankroll aid for Ukraine worth some 6.1 billion euros, according to the EU.

The EU's foreign policy chief, Josep Borrell, proposed last year creating a new cash pot specifically for aid to Kyiv - the Ukraine Assistance Fund - inside the EPF, with a budget of up to 5 billion euros per year for the next four years. That prompted a prolonged debate over the rules for future aid. An agreement on those should allow EU countries to also agree on a first injection of 5 billion euros, diplomats said, although some cautioned that was not a foregone conclusion. ($1 = 0.9158 euros)

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